Question 1

What are the three conditions that must be met in order for revenue to be recognised when the sale of a product gives the buyer the right to return the product?

Accepted Answer

The Exposure Draft Revenue from Contracts with Customers (IASB 2011)provides guidance.Paragraph B3 states: To account for the transfer of products with a right of return (and for some services that are provided subject to a refund),an entity shall recognise all of the following:
(a)revenue for the transferred products in the amount of consideration to which the entity is reasonably assured to be entitled (considering the products expected to be returned);
(b)a refund liability; and
(c)an asset (and corresponding adjustment to cost of sales)for its right to recover products from customers on settling the refund liability.
As noted above,the revenue to be recognised is that to which it 'is reasonably assured to be entitled'.In relation to what 'reasonably assured to be entitled' means,paragraph 81 states:
If the amount of consideration to which an entity expects to be entitled is variable,the cumulative amount of revenue the entity recognises to date shall not exceed the amount to which the entity is reasonably assured to be entitled.An entity is reasonably assured to be entitled to the amount of consideration allocated to satisfied performance obligations only if both of the following criteria are met:
(a)the entity has experience with similar types of performance obligations (or has other evidence such as access to the experience of other entities); and
(b)the entity's experience (or other evidence)is predictive of the amount of consideration to which the entity will be entitled in exchange for satisfying those performance obligations.
If the criteria noted above are not met then no revenue would be recognised.
For more information refer to 'Revenue recognition when the right of return exists'.

Question 2

Hillier Construction Ltd commenced the construction of a building on 1 July 2013.It has a fixed-price contract for total revenues of $45 million.The expected completion date is 30 June 2016.The expected total cost to Hillier Construction at the beginning of the project is $35 million.The following information relates only to the construction of this building: $$\begin{array} { | l | r | r | r | } 
\hline \text { For the year ending } 30 \text { June } & \begin{array} { r } 
2014 \
( \$ 000 )
\end{array} & \begin{array} { r } 
2015 \
( \$ 000 )
\end{array} & \begin{array} { r } 
2016 \
( \$ 000 )
\end{array} \
\hline \text { Costs for the year } & 12500 & 15000 & 10000 \
\hline \text { Costs incurred to date } & 12500 & 27500 & 37500 \
\hline \text { Estimated costs to complete } & 23000 & 8500 & - \
\hline \text { Progress billings during the year } & 10000 & 12000 & 23000 \
\hline \text { Cash collected during the year } & 10000 & 11000 & 24000 \
\hline
\end{array}$$ Hillier Construction uses the percentage-of-completion method based on cost to account for its construction contracts.What are the journal entries for the year ended 30 June 2014 (rounded to the nearest $000)?

Accepted Answer

A)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3345 & \
\hline \mathrm { Cr } & \text { Gross profit on construction contract } & & 3345 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3571 & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 16071 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Billings on construction in progress } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3345 & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 15845 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Billings on construction in progress } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 12500 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3345 & \
\hline \mathrm { Cr } & \text { Gross profit on construction contract } & & 3345 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3571 & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 16071 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | r | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Billings on construction in progress } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction in progress } & 3345 & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 15845 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | r | r | } 
\hline & & \$ 000 & \$ 000 \
\hline \mathrm { Dr } & \text { Construction in progress } & 12500 & \
\hline \mathrm { Cr } & \text { Materials, cash, etc. } & & 12500 \
\hline & & & \
\hline \mathrm { Dr } & \text { Accounts receivable } & 10000 & \
\hline \mathrm { Cr } & \text { Billings on construction in progress } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Cash } & 10000 & \
\hline \mathrm { Cr } & \text { Accounts receivable } & & 10000 \
\hline & & & \
\hline \mathrm { Dr } & \text { Construction expenses } & 12500 & \
\hline \mathrm { Cr } & \text { Revenue from long-term contract } & & 12500 \
\hline
\end{array}$$ C

Question 3

In relation to the expense associated with the creation of an allowance for doubtful debts,the UK Taxation Authorities:

Accepted Answer

A) never allows a deduction for taxation purposes for that amount. 
B) allows a deduction for taxation purposes for that amount when it is recognised as an expense. 
C) allows a deduction for taxation purposes immediately. 
D) allows a deduction for taxation purposes only when there is a bad debt written off against a credit customer's account. 
A) never allows a deduction for taxation purposes for that amount. 
B) allows a deduction for taxation purposes for that amount when it is recognised as an expense. 
C) allows a deduction for taxation purposes immediately. 
D) allows a deduction for taxation purposes only when there is a bad debt written off against a credit customer's account. D

Question 4

On 1 July 2013 Bryson Plc sells a machine to Adams Plc in exchange for a promissory note that requires Adams Plc to make five payments of €8000,the first to be made on 30 June 2014.The machine cost Bryson Plc €20 000 to manufacture.Bryson Plc would normally sell this type of machine for €30 326 for cash or short-term credit.The implicit interest rate in the agreement is 10%.What are the appropriate journal entries to record the sale agreement and the first two instalments using the net-interest method?

Accepted Answer

A)  $\begin{array}{|c|l|l|l|}
\hline 1 \text { July } 2013 &  & \
\hline \mathrm{Dr} & \text { Note receivable } &40000 &  \
\hline \mathrm{Cr} & \text { Sales } & &40000 \
\hline & && \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000&  \ 
\hline \mathrm{Cr} & \text { Inventory }&&20000\
\hline & && \
\hline {\text { J0 June } 2014} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 8000 \
\hline & & & \
\hline 30 \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } &8000 &  \
\hline \mathrm{Cr} & \text { Note receivable } & &8000\
\hline
\end{array}$ 
B)  $\begin{array}{|c|l|r|r|}
\hline {\text { July } 2013} & \
\hline \mathrm{Dr} & \text { Note receivable } & 30326 & \
\hline \mathrm{Cr} & \text { Sales } & & 30326 \
\hline & & & \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 20000 \
\hline\
\hline 30  \text { June } 2014 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 4967 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 3033 \
\hline\
\hline {30 \text { June } 2015} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 5464 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 2536 \
\hline
\end{array}$ 
C)  $\begin{array}{|c|l|r|r|}
\hline 1 \text { July } 2013 \
\hline \mathrm{Dr} & \text { Note receivable } & 20000 & \
\hline \mathrm{Cr} & \text { Sales } & & 20000 \
\hline & & & \
\hline 30 \text { June } 2014 & & \
\hline \mathrm{Dr} & \text { Cash } &8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 2000\
\hline \mathrm{Cr} & \text { Interest revenue } &  & 6000\
\hline\
\hline 30  \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 1800 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 6200 \
\hline
\end{array}$ 
D)  $\begin{array}{l}
1 \text { July } 2013\
\begin{array}{|l|l|l|l|}
\hline \mathrm{Dr} & \text { Note receivable } & 30326 & \
\hline \mathrm{Cr} & \text { Sales } & & 30326 \
\hline & & & \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 20000 \
\hline\
\hline{30 \text { June } 2014} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 4967 \
\hline \mathrm{Cr} & \text { Note receivable } & & 3033 \
\hline\
\hline 30  \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 5464 \
\hline \mathrm{Cr} & \text { Note receivable } & & 2536 \
\hline
\end{array}
\end{array}$ 
A)  $\begin{array}{|c|l|l|l|}
\hline 1 \text { July } 2013 &  & \
\hline \mathrm{Dr} & \text { Note receivable } &40000 &  \
\hline \mathrm{Cr} & \text { Sales } & &40000 \
\hline & && \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000&  \ 
\hline \mathrm{Cr} & \text { Inventory }&&20000\
\hline & && \
\hline {\text { J0 June } 2014} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 8000 \
\hline & & & \
\hline 30 \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } &8000 &  \
\hline \mathrm{Cr} & \text { Note receivable } & &8000\
\hline
\end{array}$ 
B)  $\begin{array}{|c|l|r|r|}
\hline {\text { July } 2013} & \
\hline \mathrm{Dr} & \text { Note receivable } & 30326 & \
\hline \mathrm{Cr} & \text { Sales } & & 30326 \
\hline & & & \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 20000 \
\hline\
\hline 30  \text { June } 2014 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 4967 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 3033 \
\hline\
\hline {30 \text { June } 2015} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 5464 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 2536 \
\hline
\end{array}$ 
C)  $\begin{array}{|c|l|r|r|}
\hline 1 \text { July } 2013 \
\hline \mathrm{Dr} & \text { Note receivable } & 20000 & \
\hline \mathrm{Cr} & \text { Sales } & & 20000 \
\hline & & & \
\hline 30 \text { June } 2014 & & \
\hline \mathrm{Dr} & \text { Cash } &8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 2000\
\hline \mathrm{Cr} & \text { Interest revenue } &  & 6000\
\hline\
\hline 30  \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Note receivable } & & 1800 \
\hline \mathrm{Cr} & \text { Interest revenue } & & 6200 \
\hline
\end{array}$ 
D)  $\begin{array}{l}
1 \text { July } 2013\
\begin{array}{|l|l|l|l|}
\hline \mathrm{Dr} & \text { Note receivable } & 30326 & \
\hline \mathrm{Cr} & \text { Sales } & & 30326 \
\hline & & & \
\hline \mathrm{Dr} & \text { Cost of sales } & 20000 & \
\hline \mathrm{Cr} & \text { Inventory } & & 20000 \
\hline\
\hline{30 \text { June } 2014} & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 4967 \
\hline \mathrm{Cr} & \text { Note receivable } & & 3033 \
\hline\
\hline 30  \text { June } 2015 & & \
\hline \mathrm{Dr} & \text { Cash } & 8000 & \
\hline \mathrm{Cr} & \text { Interest revenue } & & 5464 \
\hline \mathrm{Cr} & \text { Note receivable } & & 2536 \
\hline
\end{array}
\end{array}$

Question 5

Revenue recognition under IASB (2011)Revenue from Contracts with Customers requires that:

Accepted Answer

A) the entity has transferred to the buyer the significant risks and rewards of ownership. 
B) the entity retains neither continuing managerial involvement to the degree normally associated with ownership nor effective control over the goods. 
C) the costs incurred or to be incurred can be measured reliably. 
D) there should be a direct function of the transfer of control of the goods and services to the customer. 
A) the entity has transferred to the buyer the significant risks and rewards of ownership. 
B) the entity retains neither continuing managerial involvement to the degree normally associated with ownership nor effective control over the goods. 
C) the costs incurred or to be incurred can be measured reliably. 
D) there should be a direct function of the transfer of control of the goods and services to the customer.

Question 6

Daniel Plc sells one of its properties to a financing company with an attached call option,which allows Daniel Plc to reacquire the property at a future date for €400 000.The current market value at the time of the sale is €300 000,but the financing company pays €350 000 for it.It is expected that the market value of the property will exceed €400 000 before the option expires.What is the appropriate treatment of this sale?

Accepted Answer

A) Record the revenue and make appropriate note disclosures about the call option and its associated risks. 
B) Set-off the call option and the building-reporting changes in the difference between their current values as revenues or expenses as appropriate. 
C) No entry would be required as the call option is off balance sheet and the building has not effectively been sold. 
D) Record the inflow of cash and a liability. 
A) Record the revenue and make appropriate note disclosures about the call option and its associated risks. 
B) Set-off the call option and the building-reporting changes in the difference between their current values as revenues or expenses as appropriate. 
C) No entry would be required as the call option is off balance sheet and the building has not effectively been sold. 
D) Record the inflow of cash and a liability.

Question 7

Bellarine Plc is publisher of Mode magazine and its customers usually sign a three-year subscription with an advance payment of €500.Mode magazine has 12 issues in a year.What is the appropriate accounting treatment for this sale on the date of signing that is in accordance with IASB (2011)Revenue?

Accepted Answer

A) Recognise revenue in full as this is an immaterial amount. 
B) Recognise the sale as a provision. 
C) Recognise the sale as unearned revenue. 
D) Disclose the sale in the notes as a contingent item. 
A) Recognise revenue in full as this is an immaterial amount. 
B) Recognise the sale as a provision. 
C) Recognise the sale as unearned revenue. 
D) Disclose the sale in the notes as a contingent item.

Question 8

Revenues may be generated by:

Accepted Answer

A) holding and disposing of inventory in the normal course of business. 
B) having a liability forgiven. 
C) receiving a donation. 
D) all of the given answers. 
A) holding and disposing of inventory in the normal course of business. 
B) having a liability forgiven. 
C) receiving a donation. 
D) all of the given answers.

Question 9

In the situation that a debtor becomes unable to pay and the amount has not been anticipated through a provision for doubtful debts,what is the entry to record the bad debt?

Accepted Answer

A) Dr Debtors; Cr Provision for doubtful debts 
B) Dr Provision for doubtful debts; Cr Debtors 
C) Dr Bad debts expense; Cr Cash 
D) Dr Bad debts expense; Cr Debtors 
A) Dr Debtors; Cr Provision for doubtful debts 
B) Dr Provision for doubtful debts; Cr Debtors 
C) Dr Bad debts expense; Cr Cash 
D) Dr Bad debts expense; Cr Debtors

Question 10

Under the IASB Conceptual Framework income is now subdivided into:

Accepted Answer

A) revenues, which only include sales, fees, interest, dividends, royalties and rent; gains, which are no different in nature to revenue. 
B) gains, which are regarded as constituting a separate element in the framework; revenues, which may only arise in the course of the ordinary activities of the entity. 
C) revenues, which arise in the course of the ordinary activities of the entity; gains, which may or may not arise in the course of the ordinary activities of the entity. 
D) increases in equity referred to as gains; reductions in liabilities which are classified as revenues. 
A) revenues, which only include sales, fees, interest, dividends, royalties and rent; gains, which are no different in nature to revenue. 
B) gains, which are regarded as constituting a separate element in the framework; revenues, which may only arise in the course of the ordinary activities of the entity. 
C) revenues, which arise in the course of the ordinary activities of the entity; gains, which may or may not arise in the course of the ordinary activities of the entity. 
D) increases in equity referred to as gains; reductions in liabilities which are classified as revenues.

Question 11

The following is a diagram of the earnings cycle as presented by Coombes and Martin (1982).   In the traditional historical-cost accounting model,at what point has revenue been recognised for long-term construction contracts in the building industry?

Accepted Answer

A) Point 8 
B) Point 4 
C) Point 6 
D) Point 5 
A) Point 8 
B) Point 4 
C) Point 6 
D) Point 5

Question 12

IASB (2011)Revenue from Contracts with Customers requires revenues to be measured in terms of historical cost to improve reliability.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a step in recognising revenue according to IASB (2011)Revenue from Contracts with Customers?

Accepted Answer

A) Identify the contract with a customer. 
B) Determine the transaction price. 
C) Recognise revenue before title of the assets transfers to the customer. 
D) Identify the separate performance obligations in a contract. 
A) Identify the contract with a customer. 
B) Determine the transaction price. 
C) Recognise revenue before title of the assets transfers to the customer. 
D) Identify the separate performance obligations in a contract.

Question 14

Unearned revenues are assets treated as liabilities,as these are received by a business for services to be performed at a future date.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the different conditions detailed in IASB (2011)Revenue from Contracts with Customers that must be satisfied before the percentage-of-completion method can be used.

Accepted Answer

Under the percentage-of-completion metho

Question 16

Werribee Direct Plc is a mail order company that allows its customers to order online and return the goods without obligations.Werribee Direct Plc had experienced a high ratio of returned merchandise from online sales.What is the appropriate accounting treatment for this sale that is in accordance with IASB (2011)Revenue?

Accepted Answer

A) Record the sale only when the option to return has expired. 
B) Record the sale and reduce this by an estimate of future returns. 
C) Record the sale and account for returns as they occur. 
D) Record the sale as deferred revenue and recognise revenue progressively until expiry of the option. 
A) Record the sale only when the option to return has expired. 
B) Record the sale and reduce this by an estimate of future returns. 
C) Record the sale and account for returns as they occur. 
D) Record the sale as deferred revenue and recognise revenue progressively until expiry of the option.

Question 17

Which of the following statements is not an indicator of the transfer of the control of an asset to a customer?

Accepted Answer

A) The entity has a present right to payment for the asset. 
B) The entity has transferred physical possession of the asset. 
C) The customer has legal title to the asset. 
D) When goods or services are exchanged or swapped for goods or services, the revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred. 
A) The entity has a present right to payment for the asset. 
B) The entity has transferred physical possession of the asset. 
C) The customer has legal title to the asset. 
D) When goods or services are exchanged or swapped for goods or services, the revenue is measured at the fair value of the goods or services received, adjusted by the amount of any cash or cash equivalents transferred.

Question 18

Explain the accounting treatment when a third party supplies the awards under a customer loyalty programme.

Accepted Answer

As per paragraph 8 of IFRIC 13:
If a thi

Question 19

A group of contracts shall be treated as:

Accepted Answer

A) a single contract if negotiated as a package. 
B) a single contract only when the contracts are performed concurrently. 
C) individual construction contracts. 
D) all of the given answers. 
A) a single contract if negotiated as a package. 
B) a single contract only when the contracts are performed concurrently. 
C) individual construction contracts. 
D) all of the given answers.

Question 20

Which of the following is an example of a situation in which an entity does not retain the control of the asset?

Accepted Answer

A) when the entity retains an obligation for unsatisfactory performance not covered by normal warranty provisions 
B) when the entity provides a 30-day return from purchase with a full refund for the goods sold 
C) when the buyer has the right to rescind the purchase for a reason specified in the sales contract and the entity is uncertain about the probability of return 
D) when the goods are shipped subject to installation and the installation is a significant part of the contract that has not yet been completed by the entity 
A) when the entity retains an obligation for unsatisfactory performance not covered by normal warranty provisions 
B) when the entity provides a 30-day return from purchase with a full refund for the goods sold 
C) when the buyer has the right to rescind the purchase for a reason specified in the sales contract and the entity is uncertain about the probability of return 
D) when the goods are shipped subject to installation and the installation is a significant part of the contract that has not yet been completed by the entity

What are the three conditions that must be met in order for revenue to be recognised when the sale of a product gives the buyer the right to return the product?

In relation to the expense associated with the creation of an allowance for doubtful debts,the UK Taxation Authorities:

Revenue recognition under IASB (2011)Revenue from Contracts with Customers requires that:

Revenues may be generated by:

In the situation that a debtor becomes unable to pay and the amount has not been anticipated through a provision for doubtful debts,what is the entry to record the bad debt?

Under the IASB Conceptual Framework income is now subdivided into:

The following is a diagram of the earnings cycle as presented by Coombes and Martin (1982). In the traditional historical-cost accounting model,at what point has revenue been recognised for long-term construction contracts in the building industry?

IASB (2011)Revenue from Contracts with Customers requires revenues to be measured in terms of historical cost to improve reliability.

Which of the following is not a step in recognising revenue according to IASB (2011)Revenue from Contracts with Customers?

Unearned revenues are assets treated as liabilities,as these are received by a business for services to be performed at a future date.

Discuss the different conditions detailed in IASB (2011)Revenue from Contracts with Customers that must be satisfied before the percentage-of-completion method can be used.

Which of the following statements is not an indicator of the transfer of the control of an asset to a customer?

Explain the accounting treatment when a third party supplies the awards under a customer loyalty programme.

A group of contracts shall be treated as:

Which of the following is an example of a situation in which an entity does not retain the control of the asset?

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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Exam 13: Revenue Recognition Issues

What are the three conditions that must be met in order for revenue to be recognised when the sale of a product gives the buyer the right to return the product?

In relation to the expense associated with the creation of an allowance for doubtful debts,the UK Taxation Authorities:

Revenue recognition under IASB (2011)Revenue from Contracts with Customers requires that:

Revenues may be generated by:

In the situation that a debtor becomes unable to pay and the amount has not been anticipated through a provision for doubtful debts,what is the entry to record the bad debt?

Under the IASB Conceptual Framework income is now subdivided into:

The following is a diagram of the earnings cycle as presented by Coombes and Martin (1982). In the traditional historical-cost accounting model,at what point has revenue been recognised for long-term construction contracts in the building industry?

IASB (2011)Revenue from Contracts with Customers requires revenues to be measured in terms of historical cost to improve reliability.

Which of the following is not a step in recognising revenue according to IASB (2011)Revenue from Contracts with Customers?

Unearned revenues are assets treated as liabilities,as these are received by a business for services to be performed at a future date.

Discuss the different conditions detailed in IASB (2011)Revenue from Contracts with Customers that must be satisfied before the percentage-of-completion method can be used.

Which of the following statements is not an indicator of the transfer of the control of an asset to a customer?

Explain the accounting treatment when a third party supplies the awards under a customer loyalty programme.

A group of contracts shall be treated as:

Which of the following is an example of a situation in which an entity does not retain the control of the asset?

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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